Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
China's crackdown on Jack Ma concerns KakaoPay
By Park Jae-hyuk
KakaoPay is facing growing concerns over its second-largest shareholder, Alipay, after Beijing's financial authorities have intensified their crackdown on Jack Ma, the founder of Alibaba Group and the largest shareholder of Ant Group which operates China's leading mobile payment service.
According to foreign news outlets, Monday, the Chinese regulators are apparently attempting to break up the billionaire's fintech empire to partially nationalize the companies he owns. The authorities cited an anti-trust probe and governance reform as the primary reasons for their latest measures.
However, market participants view the months-long crackdown as an organized retaliatory measure against the businessman who criticized the Chinese Communist Party's policies in his October speech. A few days after the speech, Ant's listing on the Hong Kong and Shanghai stock exchanges was postponed indefinitely. In addition, Ma abruptly disappeared from a television show that he produced.
Market insiders here fear the difficulties facing Ant could have a negative impact on KakaoPay's business and its planned initial public offering (IPO).
Ant is serving as the second-largest shareholder of the Korean firm through Alipay Singapore Holdings which owns a 43.9 percent stake. The remaining 56.1 percent stake is held by Kakao. Alipay was said to have invested 345.2 billion won ($318 million) in KakaoPay.
KakaoPay recently failed to receive preliminary approval for a MyData license from the Financial Services Commission (FSC), last month as it had missed the deadline to submit relevant documents to Alipay Singapore Holdings. MyData business is regarded as a future growth engine for most financial firms here as its license enables them to receive their customers' credit information from conventional financial firms, so that customers can access all their financial information in one place.
“Because our major shareholder is located overseas, it takes time to receive the documents,” a KakaoPay spokeswoman said, adding there will be no problem in submitting the documents to the financial authorities this month.
The major shareholders of any company that applies for a MyData license, need to show financial soundness and social credibility.
“If the Chinese authorities continue the crackdown on Ant, this may affect the eligibility of the KakaoPay's major shareholder status,” a financial industry insider said on condition of anonymity.
From that standpoint, attention is building on whether or not KakaoPay will continue its partnership with Alipay after its listing on the local stock market scheduled for the first half of this year.
KakaoPay was initially expected to maintain cooperation with the Chinese company, even after it attracts additional investments through the IPO. The partnership has enabled the Korean firm to expand its presence overseas, including in locations such as Japan and Macau.
But the envisioned nationalization of Alibaba and Ant will negatively affect foreign partners in which the Chinese firms have invested. KakaoPay was unavailable for comment on this issue.
Despite such concerns, the mobile payment service provider has continued to expand its business portfolio. The company said Monday it applied for a preliminary approval to establish an internet-only non-life insurance firm. It has sought to set up an insurer by the end of this year.